GERMAN CONSTITUTIONAL COURT VS EUROPEAN COURT OF JUSTICE: a crash of court legitimacies with political and economic implications
On 5 May 2020, the German Federal Constitutional Court effectively ruled that the Bundesbank should not participate in what could be understood, in the German Court’s opinion, disproportionate asset purchasing policies by the European Central Bank (ECB). In practice, the ECB aggressive quantitative easing programs have been working to support the economies of the EU Member States’ economies with high levels of deficit and debt. However, the Court of Justice of the European Union (CJEU) had ruled in the opposite direction in December 2018 in a similar context. Indeed, the CJEU ruled that the ECB was not acting illegally i.e. beyond its mandate, which is in principle limited to price stability.
Before, there was a history of calculated signals by the German Constitutional Court along the lines of recognising that EU law has supremacy over German Law but without acknowledging an absolute supremacy in areas where the EU institutions would exceed its powers and breach the German Constitution. Presently, the recent German ruling is critical in the context of the gigantic financial impact of the coronavirus crisis in the EU. Some Member States were either in weaker financial situations before the coronavirus crisis or have suffered disproportionally more and have exponentially increased their deficits and debts to levels that the international investors would not support in the absence of the ECB massive bond-purchasing in the Eurozone. The question is who and how, in which proportion and modalities, has to pay the huge bill of public recent domestic expenses within the EU. To what extent countries like Germany and Holland should support through the ECB more indebted economies such as Italy and Spain. Obviously, the ‘rich’ EU countries also benefit greatly of the ‘poorer’ countries’ open markets and this with a common ‘weaker’ euro currency. But, the ECB ‘whatever it takes’ quantitative easing programs’ support of the euro and the Eurozone economies comes with winners and losers. The losers of the ECB policies and its zero interest rates’ effects include the German (and other EU) savers who have been fighting back including at Court through their political and business representatives. Importantly, the German judgment tests the limits of the EU solidarity project in a delicate context where the cross-border internal market trade, the raison d’être and crown jewel of the EU project, did not optimally work, at least for some critical initial weeks, when it was most needed and for what it was most needed i.e. a sufficient supply of the medical equipment needed to fight the coronavirus.
It remains to be seen whether the European Commission will dare to open infringement proceedings against Germany as a result of the German Constitutional Court ruling in order to restore the full credibility and supremacy of the EU system of law, and if it does whether the file will remain an initial beau political geste like others of similar political magnitude or will reach the European Court of Justice level. A review of the EU Treaties is also a classical EU-answer to these existential matters.
This crash of Court’s legitimacies and EU institutions jurisdictions is perhaps a signal that some limits in the EU integration process do exist because the ‘whatever it takes’ will not always work or not unconditionally. The question is what levels of internal solidarity the EU can tolerate as a quasi-federal political project. Similarly, the north-south solidarity issue underlies the ongoing MFF discussions. The next seven years EU budget is so important for the only apparently remote micro-cosmos of the European civil service.